Palantir Technologies Inc. ( PLTR ) shares are trading lower Thursday after backlash from Republican lawmakers over the company's expanding role in U.S. government data operations.

What To Know: The decline follows media reports suggesting that Palantir ( PLTR ) is helping consolidate sensitive government data under the Trump administration's executive order promoting cross-agency data sharing.

Several Republican legislators are raising alarms about the potential misuse of that data. Representative Warren Davidson compared the project to a “digital ID” and warned of historical patterns of abuse. Others, including Senator Mike Rounds and Representative Nancy Mace, echoed concerns about the risk of centralizing medical, financial and personal information across federal agencies. Some Democrats have also joined in calling for more oversight and restrictions on Palantir's ( PLTR ) contracts according to Semafor.

Palantir ( PLTR ) CEO Alex Karp pushed back strongly during a CNBC interview, calling the media coverage "ridiculous" and accusing The New York Times of technical ignorance and fearmongering. He insisted that Palantir's ( PLTR ) platform is secure, built to prevent unlawful surveillance, and said the criticism was a result of the company's success and growing federal adoption.

Despite these assurances, political pressure appears to be mounting. Lawmakers are reportedly considering legislative efforts to block or restrict the company's role, especially as the reauthorization of the Foreign Intelligence Surveillance Act approaches. Some GOP members say this controversy could be the opening for a rare bipartisan push to curb Palantir's ( PLTR ) access.

The controversy comes just weeks after Palantir ( PLTR ) raised its full-year guidance and reported strong revenue growth across government and commercial segments. Still, investor reaction reflects concern that the political scrutiny could affect future contracts or bring regulatory complications.

PLTR Price Action: Palantir ( PLTR ) shares were down 6.31% at $121.82 at the time of writing, according to Benzinga Pro.

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